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Highway Robbery

IN THE 2G scam proceedings before the Supreme Court and the trial court, the Central Bureau ofInvestigation (CBI) has been variously caricatured by both the complainants and the accused as theCongress Bureau of Investigation, the Confused Bureau of Investigation and Central Bureau of ImaginatiIts an undeniable fact that when it comes to bringing to book the high and mighty, the track record of thecountrys so-called premier investigating agency has been dismal. The Bofors scam, the Babri Masjid

demolition case and the anti-Sikh riots cases are only some of the sensitive cases that ran agroundbecause of the CBIs biased and subservient approach towards ruling politicians.

Will the case be over in seven years? Seven months down thline we have seen paper book after paper book being filed,rolled-up chargesheets filed, witness after witness being calledThis has been going on without a trial for months together nowa Bench comprising Justice GS Singhvi and Justice HL Dattuquipped on 14 October while hearing the bail application of the2G scam accused. The court wanted to know from the CBI howlong it planned to continue with the investigation.

Many believe perhaps justifiably so that but for thesustained judicial activism of the SC Bench comprising JusticeSinghvi and Justice AK Ganguly, former telecom minister A Rawould have still been in Sanchar Bhawan while Swan TelecomDirector Vinod Goenka, Unitech Managing Director SanjayChandra and DB Realty promoter Shahid Balwa would have sbeen jet-setting.

From Tehelka Magazine, Vol 8, Issue 43, Dated 29 Oct 2011

COVER STORYINVESTIGATION

There is corruption beyond the 2G scam. Indias highways and road construction projects are miredAshish Khetanexposes the builder-official nexus that plagues our roads.in multi-million financial scandals.

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as an engine for economic development, has been defeated. I

statement issued on 18 October, the Associated Chambers ofCommerce and Industry (ASSOCHAM) estimated the economloss due to bad condition of roads at over Rs 30,000 crore peryear. In August 2010, the road transport ministry told the RajyaSabha that out of 441 projects undertaken by the NHAI since iinception, 299 (67.80 percent) had been delayed, resulting inmassive cost and time overruns.

THE ROT within the NHAI first came to the fore when, during tNDA rule in 2002, a NHAI engineer, Satyendra Dubey (latermurdered under mysterious circumstances) wrote to then primminister Atal Bihari Vajpayee blowing the whistle on the rampa

corruption and crony capitalism prevailing in the ministry.

Over the past three years, the CBI has received over 100complaints, some anonymous and some official, alleging adeeprooted nexus between officials in the NHAI and the roadtransport ministry and various private developers. It is allegedthat crores of rupees are routinely paid as kickbacks to procurhighway development contracts, manipulate bid documents, rithe tendering process, inflate project costs, avoid penalty fordelays in execution, shoddy construction and for the officers tolook the other way while private firms collect toll much before thighways got completed. Each complaint spoke about a specif

project running into hundreds of crores and gave details aboutthe irregularities and graft involved.

But out of over 100 complaints of corruption received, all ofwhich were about the projects awarded during Kamal Nath andhis predecessor TR Baalus tenure, the agency in its wisdomsaw merit in just three. It registered cases of regular offence athen carried out raids and made arrests. Two of these caseswere registered in December 2009, and one was registered inMay 2010. But shockingly, in none of these three cases has thCBI so far filed even a single chargesheet.

Ironically, in two out of the three cases, the 2G Supreme CourBench judge Justice Singhvis younger brother SS Singhvi wasnamed as the main accused. It was alleged that Singhvi, whilehe was posted as chief general manager of NHAIs Chennairegional office, entered into a conspiracy with two privateinfrastructure companies Indu- Navayuga Infra Pvt Ltd andMadhucon Projects Ltd and by abusing his official positionallowed the companies to collect massive amount of toll eventhough road construction was far from complete. The CBI hadalleged that Singhvis act allowed the contractor to make illegagains and put the lives of those using the incomplete highway risk. Irregularities in toll collection constitute a big area ofcorruption in the management of national highways.

Photo: Shailendra Pandey

Institutionalised corruption TheNHAI stands for all that is wrong withthe road transport ministry

Photo: Tarun Sehrawat

Off road Contractors allege that atleast 3-5 percent of every projectscost is paid in bribes

Photo: Indian Express Archives

But what about those cases of graft that are not being monitorby the court? After all, telecom is not the only ministry afflictedthe malaise of corruption. The Ministry of Road Transport andHighways, particularly its apex agency for development ofnational highways the National Highways Authority of India(NHAI) has been mired in a spate of allegations of corruptioand crony capitalism. Because of rampant corruption, poorplanning, inefficiency in execution, cost overruns and inordinatproject delays, the very objective behind creating NHAI, whichwas to take national highways to global standards and thus wo

In the line of fire Over 100complaints of alleged corruptionpertain to Kamal Naths tenure

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were eliminated at different stages of the tendering processbefore the tender was finally awarded to it.

Non investigation The CBIs dismalefforts have ensured that the guiltyare let off the hook

Photo: Shailendra Pandey

A tale of Two roads Multi-crore scams involving two highways in which the builder-official nexus has been exposed. The CBI has acted on three complaints and registered cases of regular offence. Two were registere

in December 2009 and the third in May 2010. So far, the agency has not filed a single chargesheet. SS Singhvi, brother of Supreme Court judge GS Singhvi, is the main accused in two of the threecases. Singhvi was posted as chief general manager of NHAIs Chennai regional office at the time It was alleged that as CGM, Singhvi had entered into a conspiracy with two private infrastructurecompanies Indu Navayuga Infra Pvt Ltd and Madhucon Projects Ltdofficial position and allowed the companies to collect toll even though the work was miles fromcompletion. The NHAI had entered into a concession agreement with Hyderabadfor construction and maintenance of the highway from Karur to Dindigul and improvement andmaintenance of the road from the start of Karur Bypass to the end of the Bypass on NHNadu on Build, Operate and Transfer (BOT) basis. According to the agreement, the company was entitled to collect toll for 20 years after completing th

work by 16 April 2009. Misusing his official position, Singhvi allowed the contractor to start collectingthe toll, which was about Rs 1.5 lakh per day, at a time when the work on the highways was far fromcomplete. The third scam in which the NHAI is involved is the alleged rigging of the Rs 2,500 crore tender tobuild a 174 km highway connecting Nagpur in Maharashtra to Betul in Madhya Pradesh. Acting on a tip-off, the CBI found that the tender process for the project was rigged in favour ofOriental Structural Engineers Pvt Ltd (OSEPL). The agency found that all bidders except OSEPL wereeliminated at different stages of the tendering process. A year-and-a-half later, the CBI has still not concluded its investigation. The NHAI awarded the Rs2,500 crore contract to OSEPL. Only five out of 17 firms made it past the pre-bid technical qualification stage. According to the CBI,tenders of four companies, including Larsen & Toubro were rejected on frivolous grounds.

But surprisingly, over a year after the FIRs were registeredagainst Singhvi, the CBI in February this year filed a wishywasclosure report in one out of the two cases, saying the FIRwas mistake of fact. The report, a copy of which is available withTEHELKA, is full of baffling non sequiturs. It concludes by saythat the agency could not find any mala fide intention inSinghvis conduct but at the same time recommended suitablaction to be taken against him by the NHAI for showing unduehaste in granting sanctions to the contractor. The agency didnspell out what it meant by suitable action. However, whileclosing the case, the agency curiously chose to keep the secocase open. The modus operandi of the scam alleged in bothcases was exactly the same. Till date, the CBI has not concludits investigation in the second case.

THE THIRD case registered by the CBI against the NHAI is evmore curious. It involved the alleged rigging of the Rs 2,500crore tender to build a 174 km highway connecting Nagpur inMaharashtra to Betul in Madhya Pradesh. Sometime in themonth of April 2010 while the tendering process for the projectwas still on, the CBI got a specific tip-off that the bid was goingbe rigged in favour of a company named Oriental StructuralEngineers Pvt Ltd (OSEPL). The CBI conducted a preliminaryinquiry and found enough merit in the allegations. The agency

after seeking necessary approvals from the Ministry of HomeAffairs, started tapping the telephone lines of a few top compaexecutives and two senior NHAI officials. A few weeks of tappyielded incriminating evidence of the builder-official nexus. Asinformed by the complainant, all other bidders except OSEPL

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In the initial stages at least, the agency showed firm intent andmoved fast to register an FIR. On 26 May, the agency carried osimultaneous raids at the offices of NHAI and OSEPL. Twosenior NHAI officials and two top executives, including OSEPLmanaging director, were arrested and sent to jail. According toan official press release, the sleuths had found a whopping Rs2.87 crore in cash at the homes of the two NHAI officials. Butmore than a year-and-a-half later, the CBI has not yet concludeits investigation nor has it filed its first chargesheet. As a resultthe accused are out on bail, going about their usual business.More shockingly, despite the FIR in which the CBI had laid dow

the modus regisoperandi in great detail, and the subsequentraids and arrests, the NHAI went ahead and awarded the Rs2,500 crore contract to the same company with which it isalleged to have entered into a conspiracy. When the award wacontracted, Kamal Nath was the surface transport minister.

If you thought this wasnt bad enough, consider the following. A few months after the FIR was registered,the CBI wrote several letters to then Cabinet secretary KM Chandrashekhar and the road transport ministseeking sanction to investigate the then member (Projects) SI Patel, as the investigation had yielded primfacie evidence suggesting Patels involvement in the alleged rigged tender. Patel was an IAS officer of theadditional secretary level and thus prior permission from the ministry was required before the CBI couldmove against him. But Nath steadfastly refused the CBI the necessary sanction, frustrating its attempts to

go to the depth of the conspiracy. A helpless CBI then wrote to the government to at least transfer Patelfrom NHAI. Last November, Patel was repatriated to his parent cadre of Gujarat.

Repeated attempts to seek an official response from the office of NHAI Chairman AK Upadhyay and alsothe authoritys official spokesperson Vishnu Darbari proved to be futile. A senior NHAI official, speaking ocondition of anonymity, justified the decision to give the contract to OSEPL, saying that signing theconcession agreement was perfectly logical since the firm was the lowest bidder and a letter of award hadalready been issued when the CBI registered the case.

According to a contractor, at every stage of a project, one has to bribe officials. From getting monthly billscleared to clearances of quality control to completion certificates, the contractor has to give a certainpercentage of the money cleared to officers in charge. At least 3-5 percent of the cost of every project ispaid in bribes, they allege. In some cases, the contractors pay kickbacks to the NHAI engineers and

overseeing consultants and inflate the project cost many times over. The officers pass the cost overruns osome pretext or the other.

The NHAI has often been rapped by the CAG for irregularities in project execution and cost overruns. Thryears ago, the CAG estimated a revenue loss of Rs 384.25 crore to the exchequer because of theirregularities in two major national highways. The same CAG report also blamed the NHAI for faultypreparation of detailed project reports (DPR) in many projects, resulting in cost overruns. But unlike itsreport on the 2G spectrum sale, which led to a political storm, the CAGs adverse observations aboutNHAIs poor functioning and losses estimated in different projects have caught little attention.

Many in the industry see the past five years of UPA as

Well begun half done That seemsto be the NHAIs mantra whenstarting highway projects

Photo: Shailendra Pandey

one of policy stalemate within the road transport ministry

Id not like to comment on individual ministers but the fais that there is rampant corruption in the NHAI, says asenior Planning Commission official on condition ofanonymity. The system of checks and balances hasclearly failed to tackle this menace. The CBI also has

proved to be completely ineffective in nailing the culprits. Either they dont understand the modus operanor they just lack the capabilities to investigate sophisticated and institutionalised corruption like that whichprevails in the NHAI.

The CBI had alleged that Singhvi allowedthe contractor to make illegal gains andput the lives of those using the highwayat risk

Or is it the case that the agency is afraid that if these investigations are taken to their logical conclusion,many more heads in the UPA may roll? People who are aware of the details of the investigation toldTEHELKA that like the Niira Radia tapes, the tapped phone conversations between top NHAI officials andowners of OSEPL carry incriminating statements which, if placed in the public domain, are bound to

embarrass an already scam-ridden government. Whatever its reasons, the fact is that with no court orspecial body to monitor it in NHAI-related matters, the CBI seems to be unwilling to carry the ball.

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Reacting to the charges, CBI spokesperson Dharini Mishra told TEHELKA, The CBI had registered twocases against SS Singhvi on 9 November 2009. The allegations in both cases were similar, which wasabuse of official position to cause pecuniary advantage to private persons. In the case pertaining toMadhucon, the CBI filed a closure report u/s 173 (2) (i) of CrPC and it was accepted by the court. Thesecond case is still under investigation. When contacted, Singhvi refused to comment.

CBI files closure report in one case against Singhvi, keeps the second case open

On 10 December 2009, the CBI carried out simultaneous day-long raids at Singhvis offices and premisesin three cities Chennai, Delhi and Jaipur.

The CBI told the media that it was a multi-crore scam and that they had seized several documents anddetails of assets worth over Rs 1 crore from the possession of Singhvi and his family. The CBI disclosedthat the searches at Singhvis posh Shyam Nagar residence had yielded documents of a 400-sq yard plotJagdamba Nagar on Ajmer Road purchased for Rs 25 lakh, besides Rs 4.70 lakh in cash and goldweighing around 500g. A large number of bundles containing NHAI office files were found stacked in thebasement. We have also seized passbooks of 30 bank accounts and details of two bank lockers of Singhvin Chennai. A large quantity of Indian and foreign liquor was also recovered, a CBI spokesperson had tothe media.

Raids were also carried out at the residence and office premises of private contractors at Samayapuram,Aravakurichi and Tiruchendur in Tamil Nadu and in some places in Andhra Pradesh. The CBI also claimeto have seized several highend mobile phones and laptops, which they claimed were allegedly gifted to

Singhvi by private contractors. Consequently, the agency registered two cases against Singhvi, one for thalleged favours to a private firm named Madhucon and another with regard to Indu Navayuga Infra Pvt LtdOn various occasions in the past, Madhucon had been issued official warnings by the NHAI for shoddy andelayed work. But on each occasion the company managed to evade penalties or blacklisting.

In the case involving Singhvi registered by the CBI, the crux of the matter is as follows: The NHAI hadentered into a concession agreement dated 20 April 2006 with Hyderabad-based Madhucon Projects Ltdfor (i) design, engineering, construction, development, finance, operation and maintenance of the stretchfrom Karur Bypass to Dindigul (68 km) and (ii) improvement, operation and maintenance of the 13 km KaBypass on NH-7 in Tamil Nadu on Build, Operate and Transfer (BOT) basis. The validity of the agreemenwas for a period of 20 years, which means the company was entitled to collect toll for 20 years aftercompleting the contracted work. But Singhvi, by misusing his position, the FIR alleged, allowed the

contractor to start collecting the toll, which was about Rs 1.5 lakh per day, at a t ime when work on thesehighways was far from complete.

Over a year after the FIRs were registered, the CBI filed the closure report in this case. The report was firfiled before the principal sessions judge, Chennai, on 24 February this year. In March, the judge returnedthe report and asked the investigating officer (IO) P Rama Mohana Rao, a deputy SP with the CBI, tosubmit the report along with statements of witnesses recorded by the agency. On 29 March, the IOresubmitted the report along with the witnesses statements. On the same day, the judge passed the ordesaying, Reasons stated therein are convincing. Hence the FIR is closed. However, a quick read of thereport reveals glaring gaps in the CBIs investigation. The report, running into over 70 pages, leaves sevekey questions unanswered and the suspicious circumstances surrounding the act unexplained. The judgeclearly erred by not asking the agency pertinent questions seeking explanations about the glaring lacunae

in its investigation and closed the case in unjustifiable haste. The CBIs final report made the followingarguments justifying the closure of the case:

THE INDEPENDENT consultant in-charge of the project, a foreign firm named Egis Bceom International,issued the provisional certificate of completion after which the contractor started collecting the toll (TheNHAI has independent consultants monitoring projects).

The certificate was issued after due consultation with and approval from the NHAI. At the time of issuing tprovisional certificate, the work on the highway was not over but it was still issued in accordance with aprovision provided in the agreement by which the contractor could be given permission to collect toll if moof the work was over and what remained was only minor work that would not hamper the commercial use the highway.

Singhvi only passed on the request proposal from the consultant to issue the provisional certificate to NHAheadquarters and accordingly permission came from officials in Delhi and not from Singhvi.

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Since the FIR alleged that Singhvi had given permission to collect toll and this could not be substantiatedby the investigation, the agency sought to close the case.

However, the CBI failed to give any justification for thefollowing irregularities in the entire process of giving thepermission of toll collection, which even in its extremelylimp report it has found to be improper:

The deadline for the contracted work was 16 April 2009But as late as August 2009, the work was far from over. On 25 August, the NHAI regional office, Chennai

wrote a letter to the project director, NHAI, Karur, and sought the reasons for delay in project completion.Subsequently, on 1 and 2 October, discussions over delay were held in the office of the project director.This shows that at least till these dates, Singhvi was unhappy with the progress of construction.

From 17 August 2009, the contractor was requesting the consultant for issuance of provisional completioncertificate. A consultant is required to issue such certificate only after he is satisfied that the work on themain highway is complete and it could be thrown open for vehicular movement. Such a certificate is issueafter due consultation with and permission from the NHAI. But the proposal is initiated by the consultantand first vetted by the regional CGM, who in this case was Singhvi, who in turn forwarded it to the NHAIheadquarters in Delhi. Clearly, its the consultant and CGM who held the key for the issuance of any suchcertificate as the NHAI headquarters would go by the advice of its CGM. In this case, the consultant was aforeign firm and the person in charge was a foreign national, Ian Pragnell. Despite repeated requests fromthe contractor, Pragnell refused to initiate any such proposal.

However, when on 1 October 2009, Pragnell went on leave and his place was taken by his deputyViswanatha Rao, the latter initiated the proposal for provisional completion certificate hitherto denied byPragnell. Rao sent the proposal to NHAI Project Director M Thangamani. It was received by the projectdirector on the same day, who, for his part, did not waste another day in forwarding it to Singhvi. Along withis proposal, a list of both work pending on the main highway and some minor work was annexed. As perules, such a proposal could only be moved if the main carriageway is ready for use. But Singhvioverlooked this fact and forwarded the proposal to NHAI, Delhi, with an assurance that all pending work othe main carriageway would be completed by 20 October. The proposal was duly approved and permissioto collect toll granted.

In the meantime, Pragnell came back from leave and shot off a letter dated 12 October saying that theacting team leaders move to initiate the proposal for provisional certificate was unjustified. He said thatupon his return, he visited the site and found many parts of work far from complete. He also said that theassurance given by his deputy in his absence that all pending work would be completed by 20 October waunrealistic. But the CBI in its closure report has claimed that this letter, both the fax and posted copy, werreceived by Thangamani, not by Singhvis office. The CBI has not bothered to nail Singhvi on the fact thaeven if Pragnells letter did not reach him, surely the project director would have informed Singhvi.

The contractor started collecting the toll from 5 November 2009, but failed to finish the work on time. Theconsultant recommended the imposition of a total penalty of Rs 5.95 crore for the delay. At the time the Cfiled the closure report, the NHAI had not realised the penalty.

From the above-mentioned facts, which are part of theCBIs own closure report, its quite clear that the agencyhas left gaping holes in its own investigation. Besides, treport does not even talk about the 30 bank passbooksthe papers related to various properties owned bySinghvi, the NHAI files recovered from his residence in

Jaipur, the expensive mobile phones and liquor bottles which the CBI claimed it recovered during the raidIts also silent on the other case in which a similar modus operandi of illegally allowing the contractor tocollect the toll was alleged.

Is the CBI afraid that if theseinvestigations are taken to their logicalconclusion, many more heads in theUPA may roll?

Every day, the government loses atleast Rs 1 crore to road contractors byway of tolling, says a senior NHAIofficial

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The CBI FIR, a copy of which is available with TEHELKA, says that Nirmal and Jain rejected the offer offour companies, including Larsen & Toubro, at the prequalifying stage on frivolous grounds. It further saysthat in order to eliminate potential competitors, both got issued a new circular No. 54/2010 on 2 April 2010specifying that only those applications would be considered that were submitted with original documentsand thereby eliminated four bidders Valecha Engineers, Nagarjuna Construction Company, Transstroyand Reliance Infrastructure. During the processing of the present tender, the ground for disqualificationwas submission of scanned documents but during the same period, the scanned documents of Transstrowere accepted at Request for Proposal stage in a different tender by the same two officers, the FIRalleged. It concluded by saying that the two NHAI officers used to part with key confidential and vital detaof the tender process and documents and facilitated the calculation of annuity by applying financial

parameters on the upper side so that the firm can fetch maximum financial benefits and subsequentlyawarded the contract to OSEPL.

Now, a year-and-a-half later, the CBI is yet to conclude its investigation. The CBI spokesperson failed torespond on the status of the case at the time of going to press. On the other hand, VC Verma, Director,OSEPL, told TEHELKA that though the project was still with them, the construction work had not yetcommenced because of lack of environmental clearance.

A mix of corruption, inefficiency and red-tapism is crippling our roadways. There is an urgent need to givesome of our collective time and attention that is devoted by the media, courts and constitutional bodies

to issues other than the 2G scam.

With additional reporting by Brijesh Pandey and G Vishnushish hetan is ditor, In estigations with Tehelka.

ashish.khetan@tehelka.com

A senior NHAI official speaking on condition of anonymity told TEHELKA that toll collection is a mega scawithin the NHAI. Every day, the government loses at least Rs 1 crore to private contractors by way ofillegal tolling, he says.

The agency taps into phones, carries out raids and arrests, Seizes crores of rupees of cash but finally faito file a chargesheet

On 26 May 2010, the CBI arrested two senior NHAI officials a Chief General Manager named SK Nirmand a General Manager, Nitin Jain and two senior executives from OSEPL, including its Managing

Director KS Bakshi. The arrests were made after extensive raids at the homes and offices of all theaccused. All four were produced before a designated CBI court in Delhi following which the court sent theto CBI custody for five days. The accused were subjected to sustained interrogation and were later sent t

judicial custody. They remained in jail for over 50 days before being granted bail. In fact, the accusedmanaged to secure the bail because of the CBIs inability to file the chargesheet within the stipulated 60days of the arrest.

TEHELKA found that as many as 17 firms had participated at the pre-bid technical qualification stage. Buonly the following five firms made to the final stage of the bid:1) SEL-GDCL-GKC Consortium2) Oriental Structural Engineers Pvt Ltd - Continental Engines Ltd3) Shapoorji Pallonji & Co Ltd

4) IL&FS Transportation Networks Ltd5) Soma Enterprises Ltd